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Exclusive Buyer Brokerage Agreement

Guide and frequently asked questions

Understanding the Exclusive Buyer Brokerage Agreement

Last Revised: 10-11-2024

Starting August 17th, 2024, all real estate brokers providing brokerage services to buyers are required to have the buyer execute an Agreement between Buyer and Broker before any property tours can take place. This agreement outlines the responsibilities and obligations of both the broker and the buyer during the home-buying process. Below is a comprehensive guide to help you understand the key aspects of the Exclusive Buyer Brokerage Agreement and to answer common questions you might have.

Key Highlights of the Exclusive Buyer Brokerage Agreement

Section 1 - Parties Involved

The agreement is between you (the buyer, referred to as "Consumer") and the real estate broker ("Broker"). This section identifies the individuals or entities entering in to the agreement.

Section 2 - Term of the Agreement

This section specifies the start and end dates of the agreement. The agreement continues until the purchase transaction is completed, even if the termination date passes while a transaction is pending.

Section 3 - Property Search and Acquisition

You, as the buyer, specify the type of property and location you are interested in. The broker is responsible for helping you locate properties that meet these criteria.

Section 4 - Broker’s Obligations

Broker Assistance: The broker will use their professional skills to assist you in finding, viewing, and negotiating the purchase of a property. This includes cooperating with other real estate agents and brokers. Other Consumers: The broker may represent other buyers who are interested in the same properties as you. If multiple offers are made, the broker will notify you but will not disclose the terms of the competing offers. It's natural to be concerned about the Broker working with other buyers on the same property, potentially leading to a conflict of interest. While competing offers are allowed in the agreement, this is standard practice in real estate. At SABIZ, we value transparency, and we're proud to say we've never encountered this situation. Fair Housing: The broker adheres to the Fair Housing Act, ensuring no discrimination in the property acquisition process. Service Providers: The broker may refer third-party service providers, but does not guarantee their services.

Section 5 - Consumer’s Obligations

Exclusive Representation: You agree to work exclusively with the broker for all propertyrelated matters during the term of the agreement. This means that all negotiations and communications with sellers must go through your broker. The phrase "locate suitable property" reflects the Broker's traditional role, although many properties are now found online. The Buyer retains the right to conduct independent searches through Zillow or any other online platform. However, it’s vital to have open communication with the Broker and handle all negotiations through the Broker. Availability: You must be available for consultations and property viewings as needed. Indemnification: The indemnification applies only when the losses arise due to the buyer's negligence or failure to fulfill buyer's obligations. Compliance with Fair Housing: You must not request or expect the broker to restrict property searches based on protected categories such as race or religion.

Section 6 - Retainer Fee

The agreement might include a non-refundable retainer fee that is payable upon signing. This fee compensates the broker for the initial services and is separate from any commission earned at the end of the purchase transaction.

Section 7 - Compensation

The broker’s compensation is typically a percentage of the purchase price or a flat fee. This is earned when you enter into a contract to purchase a property during the term of the agreement. If the seller or the seller’s broker pays the broker, this amount may reduce what you owe. Broker will be compensated for all other types of acquisitions, including leases, rentals, and other non-purchase transactions, as if such acquisition were a purchase or exchange. Compensation will apply specifically to properties located within the cities of [list cities], and will include [list property types such as residential, commercial, etc.].

Section 8 - Protection Period

If you purchase a property that was introduced to you by the broker within 30 days after the agreement ends, you may still owe the broker compensation. This is known as the "Protection Period".

Section 9 - Conditional Termination

If you wish to terminate the agreement before its natural expiration, the broker may allow this under certain conditions, often requiring a cancellation fee. If you later purchase a property introduced by the broker during the contract term or the Protection Period, you may owe additional fees.

Section 10 - Dispute Resolution

Any disputes arising from the agreement are to be resolved through mediation, and potentially arbitration if mediation fails. Both parties are responsible for their own legal fees unless the agreement states otherwise.

Section 11 - Assignment and Binding Effect

The broker may assign the agreement to another broker. The agreement is binding on both parties’ heirs, successors, and assigns. The broker cannot unilaterally assign the agreement to another party without the buyer's consent.

Section 12 - Brokerage Relationship

As default relationship in Florida, broker will act as a transaction broker, meaning they will deal honestly and fairly, use skill and diligence, disclose all material facts about the property, and maintain limited confidentiality. There are alternative options of representation you can discuss with your broker.

Section 13 - Additional Terms

This section allows for the inclusion of any other terms or conditions that have been agreed upon by both parties.

General Questions

1. Why do I need to sign an exclusive agreement with a broker?

The exclusive agreement ensures that your broker dedicates their time and resources to helping you find the best property that meets your needs. In return for this commitment, the broker asks for exclusivity so they are compensated for their efforts. This agreement has been common in real estate transactions, and since August 17, 2024, it’s required by the National Association of Realtors® to have a signed agreement between Buyer and Broker before any property tours can take place. It protects both the buyer and the broker by clearly outlining the expectations and obligations of each party, which helps ensure a smooth and professional buying process.

2. What happens if I find a property on my own or through another agent?

Under this agreement, you’re required to inform the other party that you’re working exclusively with your broker and to refer all negotiations back to them. If you decide to purchase a property without involving your broker, you may still owe them the agreed-upon compensation, as they have been working on your behalf.

3. What if I don’t end up buying any property? Do I still have to pay the broker?

If you don’t enter into any contracts to purchase a property, you won’t owe the broker the full compensation, but the non-refundable retainer fee, if applicable, would still apply. The broker’s compensation is generally earned only when you enter into a contract to buy a property.

4. What is the purpose of the non-refundable retainer fee?

The non-refundable retainer fee compensates the broker for the initial work they do, such as researching properties, scheduling viewings, and providing professional advice and representation. This fee ensures that the broker’s time and effort are valued, even if you decide not to purchase a property.

5. What if I want to end the agreement early?

Yes, the agreement can be terminated early under certain conditions, which may involve paying a cancellation fee. This fee covers the broker’s time and effort up to that point. However, if you find a property during the contract term or the Protection Period and buy it after termination, you may still owe the broker their full compensation.

6. What is the purpose of the "Protection Period"?

The Protection Period is designed to ensure that the broker is compensated if you purchase a property they introduced to you, even if it’s after the agreement has ended. This protects the broker from being bypassed after they’ve put in significant work finding and showing properties to you.

7. Can I use another broker after the agreement ends?

Yes, you can work with another broker after the agreement ends. However, if you purchase a property introduced by the original broker within the contract term or the Protection Period, you may still owe them compensation.

8. Would I have to pay the broker even if the property purchase doesn’t close?

The broker’s compensation is earned when you enter into a contract to buy a property, not necessarily when the transaction closes. This clause ensures that the broker is compensated for successfully negotiating a deal on your behalf, regardless of factors beyond their control that might prevent closing.

9. Can the broker represent the seller as well?

If the broker is acting as a transaction broker, that means they can represent both the buyer and the seller to facilitate the transaction. However, they must disclose this dual role to both parties and treat both sides fairly. There are alternative options of representation you can discuss with your broker.

10. Can the broker work with other buyers who are interested in the same property?

Yes, the broker may represent multiple buyers even if they are interested in the same property. However, they are required to keep your offer details confidential and will notify you if a competing offer is made.

11. Can I negotiate the terms of this agreement, including the broker’s compensation?

Yes, all terms, including the broker’s compensation, are negotiable. The agreement is intended to be fair to both parties, so if there are any clauses or terms you’re uncomfortable with, discuss them with your broker before signing to find a mutually agreeable solution.

12. What if the seller is offering to pay the broker’s commission?

In many cases, the seller covers the broker’s commission, which means you won’t need to pay out of pocket. However, if the seller doesn’t cover the full commission or any commission at all, you may be responsible for the difference or full amount, depending on what’s agreed upon in the contract.

13. What if I find a property that’s For Sale by Owner (FSBO)?

If you’re interested in a FSBO property, you should still notify your broker, as they can assist with negotiations and help ensure that the transaction is handled professionally and you get the best deal possible for you. You will still owe the broker compensation for their services, even if the seller isn’t offering a commission.

14. What happens if the broker is unable to find a suitable property?

If the broker is unable to find a property that meets your criteria, you are not obligated to purchase anything. However, depending on the terms of the agreement, the nonrefundable retainer fee will not be returned, and you may need to wait until the agreement expires to work with another broker.

15. Am I responsible for any other costs besides the broker’s compensation as part of the purchase process?

Yes, as a buyer, you may be responsible for other costs such as home inspections, appraisals, mortgage fees, and closing costs. These costs are typically outside the broker’s compensation and are part of the standard process of purchasing a property.

16. How does this agreement affect my ability to purchase a property in another area?

If you’re considering purchasing a property outside the area where your broker is licensed or operates, you should discuss this with your broker. They may refer you to another broker or handle the transaction in collaboration with a local broker.

17. What happens if there is a dispute between me and the broker?

The agreement outlines that disputes should first be attempted to be resolved through mediation. If mediation doesn’t resolve the issue, the agreement may call for arbitration or litigation. It’s important to note that the prevailing party in any legal dispute may be entitled to recover legal fees.

18. What should I do if I have more questions or need clarification on any terms?

It’s important to fully understand the agreement before signing. If you have any questions or concerns, discuss them with your broker. You may also consider consulting with a real estate attorney to review the contract and ensure your interests are protected.